Add MOS Puts
Playing a Bogus Move
PLAY: Buy the MOS October 50 Puts (MOS VJ) at or under $2.70, good for the day. Place a protective stop limit at $1.90 and a sniper sell at $5.00.
Dear Bottarelli Research Member,
First and foremost, congratulations on your two strong winners from this morning. I don’t know about you, but I always love starting the day by taking winners of 50% and 60%. Great trading!
On the flip-side, we have been stopped out of our POT October 85 Puts (PYP VQ) due to some very suspicious trading behavior. After yesterday’s close, for example, POT’s top competitor Mosaic (MOS – NYSE) reported a -91% decline in fiscal first-quarter profits. MOS earned $100.6 million ($0.23 per share) versus $1.2 billion ($2.65 per share) during the same period last year.
At the same time, MOS’s revenue fell by -66% to $1.46 billion. Folks, this is a huge miss, but the stock is actually rallying on this news. How can this be?
In short, the CEO pulled a rabbit out of a hat. You see, after reporting these dismal numbers, Chief Executive Officer Jim Prokopanko said, “we believe farmers will increase application rates in response to high 2010 new crop prices and the need to replenish the large amount of nutrients withdrawn by the record crop this year.”
In other words, he’s telling investors not to worry about their latest numbers because things will get much better in 2010. And as idiotic as it sounds, investors are buying into it.
As you can see from the chart below, MOS is aggressively rallying in today’s session. Personally, I don’t think this catalyst can last. In fact, today’s upside move appears to be a gift from above. Although this morning’s pop stopped us out of our POT trade, we’ll recoup the losses by establishing a new put play on MOS. As this euphoria about a potential 2010 turnaround fades off into the distance, MOS will once again move lower. Let’s profit off this move by adding October puts now!
PLAY: Buy the MOS October 50 Puts (MOS VJ) at or under $2.70, good for the day. Place a protective stop limit at $1.90 and a sniper sell at $5.00.
Going forward, we’ll look to balance out our ledger with a new upside call. But I don’t want to get trapped into buying at a top, so I’ll run some scans and make a wise selection.
Until then…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.
Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.
CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.